Chen v. Good Chows Inc. et al

Filing 58

OPINION AND ORDER re: 57 AMENDED LETTER addressed to Magistrate Judge Henry B. Pitman from Keli Liu dated 3/7/2017 re: Joint Request for Approval of Settlement. I approve the settlement in this matter. Although the settlement agreement resolves the c laims between plaintiffs and defendants Good Chows and Li, the case remains open as to the Defaulting Defendants. Within 30 days of the date of this Order, plaintiffs are to either file a notice of dismissal as to the Defaulting Defendants pursuant to Fed.R.Civ.P. 41(a)(1)(A) or move for a default judgment. (Signed by Magistrate Judge Henry B. Pitman on 10/25/2017) Copies Transmitted By Chambers. (ras) Modified on 10/25/2017 (ras).

rr:=:::======----····
USDCSDNY
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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14 Civ. 5960

(HBP)

Plaintiffs,
OPINION
AND ORDER

GOOD CHOWS INC., et al.,
Defendants.

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PITMAN, United States Magistrate Judge

This matter is before me on the parties' joint application to approve their settlement (Docket Item ("D.I.") 57).

All

parties who have appeared in this case have consented to my
exercising plenary jurisdiction pursuant to 28 U.S.C.

§

The parties held two settlement conferences

636(c) . 1
one

before the Honorable Frank Maas, United State Magistrate Judge
(ret.) and the other before the Honorable Kevin N. Fox, United
States Magistrate Judge.

Therefore, my knowledge of the underly-

By Memorandum Decision & Order, the Honorable Frank Maas,
United States Magistrate Judge (ret.), granted plaintiffs' motion
for leave to file a first amended complaint so that they could
add three defendants to the action -- Michael Ngai, Xiao Feng
Liao and Richard Qun Yao

(collectively,

1

DOCUMENT
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YA CHEN et al.,

-against

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I

the "Defaulting

Defendants") (Order dated May 3, 2016 (D.I. 37); First Amended
Complaint, dated May 6, 2016 (D.I. 39) ("First Amended
Compliant")).
The Defaulting Defendants were found to be in
default by the Clerk of the Court on November 29, 2016
(Certificate of Default, dated Nov. 29, 2016 (D.I. 50)).

ing facts and the justification for the settlement is limited to
the complaint and counsel's representations in their motion
seeking settlement approval (First Amended Complaint; Letter of
Keli Liu, Esq., to the undersigned, dated Mar. 7, 2017

(D.I.

57) ("Liu Letter")).
Plaintiffs formerly worked at defendants' restaurant;
two plaintiffs were deliverymen and one plaintiff was a waiter.
Plaintiffs bring this action under the Fair Labor Standards Act
(the "FLSA"), 29 U.S.C.

§§

201 et al., and the New York Labor Law

("NYLL"), and seek recovery for allegedly unpaid wages and
overtime premium pay.

Plaintiffs also assert a claim based on

defendants' failure to provide certain notice and wage statements
as required by NYLL.

Plaintiffs brought the action as a collec-

tive action, but reached a proposed settlement prior to conditional certification.
Plaintiffs were employed by defendants for various
lengths of time and were paid at differing hourly rates.

Plain-

tiff Ya Chen alleges that he worked as a waiter at defendants'
restaurant from around November 2011 until July 16, 2014, and was
Yong Jie Li a deliveryman who

paid at an hourly rate of $5.00.

worked at defendants' restaurant from March 19, 2014 until
September 10, 2014, alleges that he was paid at an hourly rate of
$5.65 and worked, on average, 58.5 hours per week.
2

Ting Yun

Zhang, also a deliveryman at defendants' restaurant, was employed
from January 9, 2015 until March 1, 2015.

He alleges that he was

paid at an hourly rate of $5.65 and worked at least 60 hours per
week.

All plaintiffs allege that they did not receive overtime

pay and that defendants credited tips towards their wages without
providing them with the proper notice.

In total, plaintiffs

claim that they are entitled to approximately $46,981.61 in
unpaid wages and overtime premium pay.
Defendants deny plaintiffs' allegations.

Defendants

argue that they would be able to demonstrate, using documentary
evidence and witness testimony, that plaintiffs were properly
compensated and worked fewer hours than what they claim.

Fur-

thermore, defendants contend that plaintiffs' damages calculation
is based upon the faulty assumption that the restaurant was not
entitled to, and did not notify plaintiffs that it would, credit
plaintiffs' tips towards the minimum wage requirements.

In fact,

defendants argue that plaintiffs signed notices that informed
them of their hourly rate and the tip credit taken by defendants.
Plaintiffs and defendants Good Chows Inc.
Chows") and Cheng Tao Li

(collectively, "the Settling Parties")

have agreed to a total settlement of $22,250.00
1).

("Good

(Liu Letter, Ex.

The Settling Parties have also agreed that plaintiffs'

counsel will receive $1,000.00 to reimburse their out-of-pocket
3

expenses and $7,083.33 for attorney's fees.

The amount claimed

by each plaintiff 2 and the net amount that will be received by
each after deduction of legal fees and costs are as follows:

Plaintiff

Length of
Emoloyment

Amount
Claimed

Net
Settlement
Amount

Ya Chen

141 weeks

$28,411.82

$8,567.20

25 weeks

$15,269.56

$4,604.33

$3,300.23

$995.14

$46,981.61

$14,166.67

Yong Jie Li
Ting Yun Zhang

7 weeks

Total

173 weeks

Court approval of an FLSA settlement is appropriate
"when [the settlement] [is] reached as a result of
contested litigation to resolve bona fide disputes."
Johnson v. Brennan, No. 10 Civ. 4712, 2011 WL 4357376,
at *12 (S.D.N.Y. Sept. 16, 2011).
"If the proposed
settlement reflects a reasonable compromise over contested issues, the court should approve the settlement."
Id. (citing Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1353 n. 8 (11th Cir. 1982)).
Agudelo v. E & D LLC, 12 Civ. 960
(S.D.N.Y. Apr. 4, 2013)

(HB), 2013 WL 1401887 at *1

(Baer, D.J.)

(alterations in original)

"Generally, there is a strong presumption in favor of finding a
settlement fair,

[because] the Court is generally not in as good

a position as the parties to determine the reasonableness of an
FLSA settlement."

Lliguichuzhca v. Cinema 60, LLC,

2

948 F. Supp.

The amount claimed by each plaintiff includes unpaid
minimum wage and overtime premium pay, exclusive of liquidated
damages and statutory damages for alleged violations of the NYLL.
4

2d 362, 365 (S.D.N.Y. 2013)
tion marks omitted).

(Gorenstein, M.J.)

(internal quota-

In Wolinsky v. Scholastic Inc.,

900 F.

Supp. 2d 332, 335 (S.D.N.Y. 2012), the Honorable Jesse M. Furman,
United States District Judge, identified five factors that are
relevant to an assessment of the fairness of an FLSA settlement:
In determining whether [a] proposed [FLSA]
settlement is fair and reasonable, a court should
consider the totality of circumstances, including but
not limited to the following factors:
(1) the
plaintiff's range of possible recovery; ( 2) the extent
to which the settlement will enable the parties to
avoid anticipated burdens and expenses in establishing
their claims and defenses; (3) the seriousness of the
litigation risks faced by the parties; (4) whether the
settlement agreement is the product of arm's length
bargaining between experienced counsel; and (5) the
possibility of fraud or collusion.
(internal quotation marks omitted).

The settlement here satis-

fies these criteria.
First, before deduction of legal fees and expenses, the
settlement represents roughly half (or 47.1%) of plaintiffs'
allegedly unpaid wages and overtime premium pay, exclusive of
liquidated damages, interest and penalties from alleged statutory
violations.

Good Chows and Li argue that plaintiffs did not work

the number of hours that they allege and that plaintiffs received, and signed, written notice indicating their tips would be
credited towards their wages.

Moreover, Good Chows and Li

apparently kept records that support their arguments.

5

As dis-

cussed in more detail below, given the risks these issues present, plaintiffs' settlement amount is reasonable.
Second, the settlement will entirely avoid the expense
and aggravation of litigation.

Good Chows and Li dispute the

number of hours worked and wages paid to plaintiffs.

Trial

preparation would probably require additional depositions to
explore these issues.

The settlement avoids the necessity of

conducting these depositions.
Third, the settlement will enable plaintiffs to avoid
the risk of litigation.

Plaintiffs will have to establish that

Good Chows and Li did not provide and that plaintiffs did not
sign notices which informed plaintiffs of their hourly rate and
the tip credit taken by Good Chows and Li.

Moreover, Good Chows

and Li apparently kept pay records, pay stubs and time records
which, Good Chows and Li contend, show that plaintiffs worked far
fewer hours than they allege.

Given the documentary evidence and

the fact that plaintiffs bear the burden of proof, it is uncertain whether, or how much, plaintiffs would recover at trial.
See Bodon v. Domino's Pizza, LLC, No. 09-CV-2941
588656 at *6 (E.D.N.Y. Jan. 16, 2015)

(SLT)

2015 WL

(Report & Recommendation)

("[T]he question [in assessing the fairness of a class action
settlement] is not whether the settlement represents the highest
recovery possible .

. but whether it represents a reasonable
6

one in light of the uncertainties the class faces .

II

(internal quotation marks omitted)), adopted sub nom. by, Bodon
v. Domino's Pizza, Inc., 2015 WL 588680

(E.D.N.Y. Feb. 11, 2015);

Massiah v. MetroPlus Health Plan, Inc., No.

ll-cv-05669 (BMC),

2 0 12 WL 5 8 7 4 6 5 5 at * 5 ( E . D. N . Y . Nov . 2 0 , 2 0 12 )

(

11
[

W] hen a settle -

ment assures immediate payment of substantial amounts to class
members, even if it means sacrificing speculative payment of a
hypothetically larger amount years down the road,
reasonable .

II

settlement is

(internal quotation marks omitted)).

Fourth, counsel represents that the settlement is the
product of arm's-length bargaining between experienced counsel
and that counsel advocated zealously on behalf of their respective clients during negotiations.
Fifth, there are no factors here that suggest the
existence of fraud.

Counsel represents that the settlement was

agreed upon after extensive negotiations between the parties'
attorneys.
The allocation of funds from the net settlement amount
among the three plaintiffs is fair and reasonable.

The settle-

ment allocates approximately 60.4% of the net settlement to Chen,
32.4% to Li and 7.2% to Zhang.

According to information provided

by the parties, Chen was employed by defendants for approximately
141 weeks, Li for 25 weeks, and Zhang for seven weeks.
7

Chen's

hourly rate was approximately $5.00, while Li and Zhang's hourly
rates were $5.25.

In light of the number of weeks worked by, and

hourly rate paid to, plaintiffs, the allocation of the settlement
fund is fair and reasonable.

Cf. Fu v. Mee May Corp., 15 Civ.

4549 (HBP), 2017 WL 2172910 at *1-*2
(Pitman, M. J.)

(S.D.N.Y. Mar. 31, 2017)

(rejecting settlement agreement where no explana-

tion provided for allocation of settlement proceeds).
The proposed settlement also contains a release (Liu
Letter, Ex. 1

~

3).

It provides, in pertinent part, that plain-

tiffs release
Defendants and their parent corporations affiliates,
subsidiaries, divisions, predecessors, insurers, successors and assigns and Defendants' current and former
owners, employees, officers, directors and agents
thereof (collectively "releasees") from all actions,
causes of action, suits .
. under the Fair Labor
Standards Act, the New York Labor Law and the Wage
Theft Prevention Act, as well as claims for overtime
commissions, unpaid wages,
., and all claims for
improper deductions, traveling, spread of hours pay,
bonuses, expense reimbursements, gratuities, tip credits, tip allowances, service charges and retained
gratuities during Plaintiff[s'] employment with Defendants and any other compensation or wages.
The release
is solely limited to wage and hour claims that have
arisen prior to the date this Agreement is executed
(Liu Letter, Ex. 1

~

3).

This release is permissible because it

is limited to plaintiffs' claims relating to wage and hour
issues.

See

~.g.,

Yunda v. SAFI-G, Inc., 15 Civ. 8861

2017 WL 1608898 at *3 (S.D.N.Y. April 28, 2017)

8

(HBP),

(Pitman, M.J.);

Santos v. Yellowstone Props., Inc., 15 Civ. 3986 (PAE), 2016 WL
2757427 at *1, *3 (S.D.N.Y. May 10, 2016)

(Engelmayer, D.J.)

(approving release that included both known and unknown claims
but was limited to wage and hour claims); Hyun v. Ippudo USA
Holdings, 14 Civ. 8706 (AJN), 2016 WL 1222347 at *3-*4
Mar. 24, 2016)

(Nathan, D.J.)

(S.D.N.Y.

(approving release that included

both known and unknown claims and claims through the date of the
settlement that was limited to wage and hour issues; rejecting
other release that included both known and unknown claims and
claims through the date of the settlement that was not limited to
wage and hour issues); cf. Alvarez v. Michael Anthony George
Constr. Corp., No. 11 CV 1012
(E.D.N.Y. Aug. 27, 2015)

(DRH) (AKT), 2015 WL 10353124 at *1

(rejecting release of all claims "wheth-

er known or unknown, arising up to and as of the date of the
execution of this Agreement" because it included "the release of
claims unrelated to wage and hour issues"

(internal quotation

marks omitted)).
Finally, the settlement agreement provides that approximately 33.3% of the settlement fund, excluding plaintiffs'
counsel's out-of-pocket expenses, will be paid to plaintiffs'
counsel as contingency fees.

Contingency fees of one-third in

FLSA cases are routinely approved in this Circuit.
Tepeyac Butcher Shop Inc., 15 Civ. 814
9

Santos v. EL

(RA), 2015 WL 9077172 at

*3 (S.D.N.Y. Dec. 15, 2015)

(Abrams, D.J.)

("[C]ourts in this

District have declined to award more than one third of the net
settlement amount as attorney's fees except in extraordinary
circumstances."), citing Zhang v. Lin Kumo Japanese Rest. Inc.,
13 Civ. 6667
2015)

(PAE), 2015 WL 5122530 at *4

(S.D.N.Y. Aug. 31,

(Engelmayer, D.J.) and Thornhill v. CVS Pharm., Inc., 13

Civ. 507

(JMF), 2014 WL 1100135 at *3 (S.D.N.Y. Mar. 20, 2014)

(Furman, D.J.); Rangel v. 639 Grand St. Meat & Produce Corp., No.
13 CV 3234

(LB), 2013 WL 5308277 at *l (E.D.N.Y. Sep. 19, 2013)

(approving attorney's fees of one-third of FLSA settlement
amount, plus costs, pursuant to plaintiff's retainer agreement,
and noting that such a fee arrangement "is routinely approved by
courts in this Circuit"); Febus v. Guardian First Funding Grp.,
LLC, 870 F. Supp. 2d 337, 340 (S.D.N.Y. 2012)

(Stein, D.J.)

("[A]

fee that is one-third of the fund is typical" in FLSA cases);
accord Calle v. Elite Specialty Coatings Plus, Inc., No. 13-CV6126 (NGG) (VMS), 2014 WL 6621081 at *3 (E.D.N.Y. Nov. 21, 2014);
Palacio v. E*TRADE Fin. Corp., 10 Civ. 4030 (LAP) (DCF), 2012 WL
2384419 at *6-*7 (S.D.N.Y. June 22, 2012)

(Freeman, M.J.).

Accordingly, for all the foregoing reasons,
the settlement in this matter.

I approve

Although the settlement agreement

resolves the claims between plaintiffs and defendants Good Chows
and Li, the case remains open as to the Defaulting Defendants.
10

Within 30 days of the date of this Order, plaintiffs are to
either file a notice of dismissal as to the Defaulting Defendants
pursuant to Fed.R.Civ.P. 41(a) (1) (A) or move for a default
judgment.

Dated:

New York, New York
October 25, 2017
SO ORDERED

HE~/~
United States Magistrate Judge
Copies transmitted to:
All Counsel

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